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Environmental Law Network International 1/2003 Thus, the English regulator admits the eventual eme rgence of trade-offs and proposes a procedural method to be used before by the operator, namely, to undertake an environmental assessment. From another point of view, it might become as well problematic how Member States will implement the term “significant pollution” embedded in Article 25. Nevertheless, it should be noticed that the European Court of Justice can carry out as a last resort a judicial control over the way Member States implement both directives, and as a consequence indeterminate concepts like BAT, significant pollution or the criteria for national allocation as included in Annex III of the Directive will be fully scrutinized by the judicial control of the ECJ. Together with emission limit values energy efficiency emerged as another overlapping area between ET and IPPC. Article 2 of the ET proposal incorporated a paragraph 2 according to which the ET Directive “will be without prejudice to any requirement pursuant to Directive 96/61 that relate to energy efficiency”. As one should know, energy efficiency is one of the factors to be included by state authorities into the integrated permit according to Article 3 (d) of the IPPC Directive 10. As enlightened by the Commission Art. 2 of the ET proposal would involve that the IPPC establishes a common level of effort for the efficient use of energy, which in any case must be carried out by every operator. Although the Commission insisted in its Non-Paper that this bottom line for energy efficiency should not create big concerns, in the recent Council of the EU 11 the reference to energy efficiency was removed from Article 2 as suggested as well by the opinion of different Committees within the EU parliament reading. The question remains then which are those basic efficiency criteria and in which way Member States – if ever – have considered efficiency criteria when issuing IPPC emission permits. It seems that IPPC permits as emanated from different Member States’ authorities have often overlooked efficiency criteria and when energy efficiency were considered different requirements were imposed by Member States. 12 10 On how the implementation of IPPC energy efficiency requirements could constrain or facilitate the participation of regulated emissions in any trading scheme and presenting different scenarios, see: A. Smith and S. Sorrell, Interaction between environmental policy instruments: carbon emissions trading and integrated pollution, Vol. 15 N. 1, International Journal of Environmental and Pollution, 2001, pp. 22-41. 11 Council of the European Union, Brussels, 11 December 2002. 12 For instance in Germany, the IPPC directive was integrated into German law in its Federal Law on Immissions (BImSchG). Its Art. 5 includes the conditions that all installations must fulfil. Whereas in the old law the requirement to use heat was included, in the new law this requirement was eliminated and the new requirement to use energy efficiently and energy saving manner was introduced. (Art. 5.4 Pflichten der Betreiber genehmigungsbedürftiger Anlagen: ...Energie sparsam und effizient verwendet Additionally, energy efficiency and emission limits as required by the IPPC on greenhouse gases recover much more of their significance in view of the recent Council’s political agreement on the ET Directive that embraced the possibility of temporary exclusion of certain installations (Article 25 (a)). In a parallel modification the Council amended Article 25 of the Commission’s proposal by integrating a fourth paragraph stating that, in case of temporary exclusion, Article 9.3 of the IPPC Directive will fully apply. 13 That means that whenever there is an exclusion of certain installations from the Community’s Greenhouse Gas Emission Trading Programme, Member States will need to consider all requirements included in Article 9.3 when limiting emissions through national policies. It could also be possible that IPPC BAT determinations could provide benchmarks that may help resolve the issue of initial allowance allocation. The interest of this scenario lies in its use of information generated by the IPPC process to facilitate a trading scheme. Furthermore, although the regulatory cultures and traditions of each Member State will have an important influence on how each Member State interprets and implements the IPPC Directive, 14 the wird). In other national juridical orders such an explicit reference is lacking. On this issue see: Interaction in EU Climate Policy, German policy context - other climate policy instruments, http://www.susx.ac.uk/spru/environment/research/wp5germany.pdf. 13 Art. 25 modified by the Council reads: In Article 9(3) of the Directive 96/61/EC the following sub-paragraphs are added: Where emissions of a greenhouse gas from an installation are specified in Annex I to the Directive / EC of the European Parliament and of the Council (establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC) in relation to an activity carried out in that installation, the permit shall not include an emission limit value for direct emissions of that gas unless it is nece ssary to ensure that no significant local pollution is caused. For activities listed in Annex I of Directive / /EC Member States may choose not to impose requirements relating to energy efficiency in respect of combustion units or other units emitting carbon dioxide on the site: Where necessary, the competent authorities shall amend the permit as appropriate. The three preceding paragraphs shall not apply to installations temporarily excluded from the Community greenhouse gas emissions trading scheme in accordance with Art. 25 (a) of the Directive / /EC. 14 In England the Horizontal Guidance Note: IPPC H2 Integrated Pollution Prevention and control (IPPC) Energy Efficiency, Environment Agency England, January 2001 provides information on the interface between IPPC and Emissions Trading. In England, all IPPC installations have to meet the initial energy efficiency requirements. At this point the regulations diverge. The sector guidance notes outline a number of other areas for improving process efficiency for organisations not covered by separate agreements with the government. These cover the full range of energy efficiency techniques available to industrial installations from design considerations through the selection of energy efficient equipment to options for energy supply. However, organisations that are included in a climate change agreement are not covered by these requirements. Neither are installations taking part in the new carbon trading schemes. Instead, they have a target for efficiency improvements, negotiated with DETR (now DEFRA). These provide for a specified improvement in efficiency over a 10-year period, with biennial reviews. Such agreements are not regulated by the environment agencies: indeed, the Agency guidance does not say: The regulators will not enforce any part of the climate change agreement or trading agreement. The government says that this will ensure installation-specific basic energy requirements are delivered, while allowing industry the flexibility of 15
16 1/2003 Environmental Law Network International interpretation of the energy efficiency requirements in the BREFs (BAT reference documents) notes may restrict the scope for Member States comp etence 15. That is why it will be important to be attentive to the way in which BREFs will include basic energy efficiency requirements. Finally, one should also bear in mind that, as some authors have suggested despite the fact that energy efficiency relates intimately to carbon savings, energy efficiency can generate beneficial policy outcomes greater than carbon savings alone. In the industrial sector more efficient energy use nevertheless reduces other pollutants (such as substances and sulphur) and it reduces risks related with security of energy supply. So energy efficiency gains are not directly interchangeable with carbon savings. 16 Permitting Procedures As in the IPPC Directive, the central concept of the ET proposal rests on the concept of a “permit” (Article 4 of the ET proposal) which will include an obligation for the operator to hold allowances equal to the actual emissions as well as to fulfil his obligations in terms of monitoring and reporting of emissions. 17 Through the comparison of both directives it can be observed that those articles related with the permit follow a parallel structure and logic: permits, application for permits, conditions for and contents for the permit. Thereby from a procedural point of view both instruments are designed according to the same logic and as such they are, or at least should be fully compatible. Probably the most significant aspects regarding the permitting procedure is that the proposed ET Directive not only allows but also encourages Member delivering the additional requirement I as the most effective cost way. See for a detailed study of the synergies between the Emission Trading system and other policy instruments in the UK, Adrian Smith, UK Policy context - non trading climate policy instruments, SPRU Project, October 2001. http://www.susx.ac.uk/spru/environment/research/wp4ukfinal.pdf. 15 To help Member States with the implementation of the IPPC directive, the EU Commission settled the European IPPC bureau based at the Joint Research Centre in Seville. The IPPC bureau is responsible for coordinating and publishing a series of BREF documents which provide technical information and benchmark emission levels for industrial processes. These BREFs are intended to assist the licensing authorities to assess BAT. 16 A. Smith, Steve Sorrell and Jim Watson, The EU Climate Policy Context: Interaction in EU Climate Policy, August 2001 SPRU, p.46, see also http://www.susx.ac.uk/spru/environment/research/interact_final.pdf “Because obligated efficiency measures meet wider policy objectives than just carbon savings, it appears undesirable for under-complying target groups to meet a shortfall in their energy efficiency obligation by buying from a carbon permit market”. 17 For a clear exposition of the conception of the IPPC see, N. Emott, An Overview of the IPPC directive and its Development, p. 23-43 in Integrated Pollution Prevention and Control: The EC Directive from Comparative Legal and Economic Perspective, ed. Chris Backes and Gerrit Betlem, Kluwer International, 1999. States to design the ET permit upon the already existing permitting procedures under the IPPC Directive (12 Explanatory Memorandum). In this sense Article 8 of the proposed ET Directive states that not only “…Member states shall take the necessary measures to ensure that …the conditions of, and procedure for, the issue of greenhouse gas emission permit are fully co-ordinated with those for the permit provided for in that Directive (IPPC Directive)”, but equally that Member States “may fulfil the requirements pursuant to Art. 5, 6 and 7 through a single procedure in accordance with Directive 96/61”. In other terms, requirements upon an application for permits, conditions for and contents of the permit as well as changes to installations can be linked to those required by the IPPC Directive under a single process. The wording of the article might lead to think that the co-ordination in the issue of permits under both directives has an imperative character. Yet that seems improbable. One the one hand, from the Explanatory Memorandum it can be deduced that the ET proposal seems to give a large ma rgin of manoeuvre to Member States concerning the coordination of permits since, as declared in point 12, Member States could for instance decide whether the permitting authority will be the same or whether the permits might be issued in a single or multiple procedure. The same procedural flexibility is reflected in the Non-Paper on Synergies in which the Commission declares that Article 8 does not oblige to combine both procedures. Thus, although the combination is not required Article 8 seems to require the “co-ordination” of both permits. That would mean according to the Non-Paper that, for instance, the compulsory consultation of the IPPC competent authority before issuing an ET permit is required. Indeed Article 8 calls for an extension of the “integrated approach” set forth in Article 7 of the IPPC Directive. 18 In this respect, it would interesting to analyse the way in which national authorities have implemented the integrated and coordinated approach of Article 7 of Dir. 96/61 to anticipate how and to which extent there will appear an effective co-ordination of permits between IPPC and ET Directives. Unfortunately, few data exist so far upon the approach adopted by Member States 18 Art. 7 Dir. 96/61 “Member States shall take the measures necessary to ensure that conditions of, and procedure for the grant of, the permit are fully co-ordinated where more than one competent authority is involved, in order to guarantee an effective integrated approach by all authorities competent for this procedure.”
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